Shares of pet-focused eCommerce platform Chewy (NYSE:CHWY) have been on a roller-coaster ride over the past week after retail trader Keith Gill, also known in online forums as “Roaring Kitty,” took a liking to the stock. The action is already pushing Chewy shares higher in the premarket session today.
Kitty Picks Up Major Stake in CHWY
Last week, Gill posted a picture of a dog on X (formerly Twitter). Yesterday, he disclosed a 6.6% stake in Chewy, making him the third-largest stakeholder in the company. The announcement of a $500 million stock buyback from the company added further fuel to the fire, with Chewy shares rising from April lows of around $15 to as much as $30 last week.
A Curious Lawsuit
However, the rally seems to be losing steam, now that Gill has been dragged into a lawsuit by GameStop (NYSE:GME) shareholders. The lawsuit accused Gill of engaging in a pump-and-dump scheme in GME stock. The lawsuit cited Gill’s maneuvers in GME over the past few weeks, as he accumulated GME shares and call options, dumping some of his holdings subsequently. Curiously, the lawsuit was voluntarily withdrawn yesterday without any clarification.
Recent Analyst Actions
Meanwhile, analysts are taking a relook at their stances on Chewy. Guggenheim’s Steven Forbes has reiterated a Buy rating for Chewy while hiking his price target on the stock to $32 from $25. Wedbush’s Seth Basham has also upped his target price for Chewy to $35 from $28 while maintaining a Buy rating.
Is CHWY Stock a Buy, Sell, or Hold?
Overall, though, the Street is cautiously optimistic about Chewy with a Moderate Buy consensus rating. The average CHWY price target of $25.93 indicates the stock may be hovering at fair valuation levels at present.
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